This management's discussion and analysis (MD&A) should be read in conjunction
with the unaudited condensed consolidated financial statements and notes
appearing elsewhere in this Quarterly Report and our Annual Report on Form 10-K
for the year ended December 31, 2019.

Unless the context otherwise requires, references to "we," "our," "us" or "AAM"
shall mean collectively (i) American Axle & Manufacturing Holdings, Inc.
(Holdings), a Delaware corporation, (ii) American Axle & Manufacturing, Inc.
(AAM, Inc.), a Delaware corporation, and its direct and indirect subsidiaries,
and, (iii) Metaldyne Performance Group, Inc. (MPG) and its direct and indirect
subsidiaries. AAM Inc. and MPG are wholly-owned subsidiaries of Holdings.

COMPANY OVERVIEW



We are a global Tier 1 supplier to the automotive industry. We design, engineer
and manufacture driveline and metal forming products that are making the next
generation of vehicles smarter, lighter, safer and more efficient. We employ
approximately 20,000 associates, operating at nearly 80 facilities in 17
countries, to support our customers on global and regional platforms with a
focus on quality, operational excellence and technology leadership.

Major Customers



We are a primary supplier of driveline components to General Motors Company (GM)
for its full-size rear-wheel drive (RWD) light trucks, sport utility vehicles
(SUVs), and crossover vehicles manufactured in North America, supplying a
significant portion of GM's rear axle and four-wheel drive and all-wheel drive
(4WD/AWD) axle requirements for these vehicle platforms. We also supply GM with
various products from our Metal Forming segment. Sales to GM were approximately
40% of our consolidated net sales in the first nine months of 2020, 38% in the
first nine months of 2019, and 37% for the full year 2019.

We also supply driveline system products to FCA US LLC (FCA) for heavy-duty Ram
full-size pickup trucks and its derivatives, the AWD Jeep Cherokee, and a
passenger car driveshaft program. In addition, we sell various products to FCA
from our Metal Forming segment. Sales to FCA were approximately 18% of our
consolidated net sales in the first nine months of 2020, 16% in the first nine
months of 2019, and 17% for the full year 2019.

We are also a supplier to Ford Motor Company (Ford) for driveline system
products on certain vehicle programs, and we sell various products to Ford from
our Metal Forming segment. Sales to Ford were approximately 12% of our
consolidated net sales in the first nine months of 2020, and were approximately
9% for both the first nine months of 2019 and the full year of 2019.

No other customer represented 10% or more of consolidated net sales during these periods.

Impact of Novel Coronavirus (COVID-19)

COVID-19 Operational Impact and AAM Actions



In March of 2020, COVID-19 was designated by the World Health Organization as a
pandemic illness and began to significantly disrupt global automotive
production. In an effort to mitigate the spread of COVID-19, many governmental
and public health agencies in locations in which we operate implemented
shelter-in-place orders or similar measures. The majority of our customers
temporarily ceased or significantly reduced production near the end of March,
which continued into the second half of the second quarter. As a result,
substantially all of our manufacturing facilities either temporarily suspended
production or experienced significant reductions in volumes during this period.


                                       32
--------------------------------------------------------------------------------

At AAM, safety is our top responsibility and that includes the health and wellness of our associates globally. In response to COVID-19, we instituted several operational measures to ensure the safety of our associates, which included the following:



•Assembled a COVID-19 Task Force comprised of AAM's senior leadership working
closely with associates across several functions and regions to coordinate
decision making and communication related to actions taken by AAM to mitigate
the impact of COVID-19;
•Suspended or reduced production at manufacturing facilities and directed
associates who could do so to work remotely;
•Maintained communication with customers, including planning for business
resumption and monitoring announcements regarding new program deferrals or other
changes;
•Initiated thorough cleaning and decontamination procedures at many of our
manufacturing facilities in preparation for resuming production; and
•Designed additional safety measures to further protect associates as production
is restored and our associates resume working in our global facilities.

By the end of the first quarter of 2020, our manufacturing locations in Asia,
which were impacted by COVID-19 earlier than other global regions, were
beginning to stabilize and return to more normalized levels of production. We
restarted operations in North America and Europe in May 2020, and we have
continued to ramp up production, along with our customers and supply base,
through the third quarter of 2020. Continuing to maintain more normalized levels
of production will depend on future developments, including the potential
extension of shelter-in-place orders and increased levels of production by our
customers, which are outside of our control. We continue to monitor the impact
of COVID-19 on our suppliers, as well as on our customers and their suppliers.

Financial Impact of COVID-19



We estimate that the impact of COVID-19 on net sales was approximately
$87 million and $1,203 million for the three and nine months ended September 30,
2020, respectively. Further, we estimate that the impact to gross profit of this
reduction in net sales was approximately $16 million and $362 million for the
three and nine months ended September 30, 2020, respectively. Due to the
significant uncertainty associated with the extent of the impact of COVID-19,
including the possibility of a resurgence of COVID-19 cases and our ability to
sustain more normalized levels of production, we cannot estimate the ultimate
impact of COVID-19 on our results of operations and financial condition.

In order to mitigate the financial impact of COVID-19, we have continued our
emphasis on cost management, and have implemented additional measures to adjust
to our customers' revised production schedules, including:

•Continuing to flex our variable cost structure;
•Continuing to manage our controllable expenses, net of costs to ensure the
health and safety of our associates;
•Reducing the annual cash retainer for each non-employee director by 40% through
September 30, 2020;
•Reducing salaries for executive officers by 30% and for certain other
associates by various percentages depending on level through September 30, 2020;
•Reducing our projected capital expenditures for the year;
•Amending our Credit Agreement to, among other things, revise our financial
maintenance covenants to provide additional financial flexibility; and
•Pursuing options to defer and reduce tax payments through the CARES Act and
similar global initiatives.

The measures we are taking to address the impact of COVID-19 are expected to
remain in place until further clarity can be achieved regarding the recovery and
stabilization of the global economy, as well as the resulting impact of COVID-19
on the global automotive industry. We expect to adjust our use of these
measures, to the extent possible, based on production volumes and customer
demand.
                                       33
--------------------------------------------------------------------------------

RESULTS OF OPERATIONS -- THREE MONTHS ENDED SEPTEMBER 30, 2020 AS COMPARED TO THREE MONTHS ENDED SEPTEMBER 30, 2019

Net Sales Net sales were $1,414.1 million in the third quarter of 2020, as
compared to $1,677.4 million in the third quarter of 2019. Our change in sales
in the third quarter of 2020, as compared to the third quarter of 2019,
primarily reflects an estimated reduction of approximately $87 million
associated with the decline in global automotive production as a result of
COVID-19, and a reduction of approximately $155 million as a result of the sale
of the U.S. operations of our Casting business that was completed in the fourth
quarter of 2019 (the Casting Sale). Net sales in the third quarter of 2020, as
compared to the third quarter of 2019, also decreased by approximately $15
million associated with the effect of metal market pass-throughs to our
customers and the impact of foreign exchange related to translation adjustments.

Cost of Goods Sold Cost of goods sold was $1,164.3 million in the third quarter
of 2020, as compared to $1,428.7 million in the third quarter of 2019. The
change in cost of goods sold principally reflects an estimated reduction of
approximately $71 million associated with the decline in global automotive
production as a result of COVID-19, and a reduction of $153 million as a result
of the Casting Sale. Cost of goods sold was also impacted by a decrease of
approximately $15 million related to metal market pass-through costs and the
impact of foreign exchange, as well as the impact of improved operating
performance and lower launch costs and our emphasis on cost management,
including the additional measures that we implemented in response to the impact
of COVID-19.

For the three months ended September 30, 2020, material costs were approximately
58% of total cost of goods sold, as compared to approximately 55% for the three
months ended September 30, 2019.

Gross Profit  Gross profit was $249.8 million in the third quarter of 2020, as
compared to $248.7 million in the third quarter of 2019. Gross margin was 17.7%
in the third quarter of 2020, as compared to 14.8% in the third quarter of
2019. Gross profit and gross margin were impacted by the factors discussed in
Net Sales and Cost of Goods Sold above.

Selling, General and Administrative Expenses (SG&A) SG&A (including research and
development (R&D)) was $66.5 million or 4.7% of net sales in the third quarter
of 2020, as compared to $92.7 million or 5.5% of net sales in the third quarter
of 2019. R&D expense, net of customer engineering, design and development (ED&D)
recoveries, was approximately $18.0 million in the third quarter of 2020, as
compared to $37.4 million in the third quarter of 2019. The decrease in SG&A
expense in the three months ended September 30, 2020, as compared to the three
months ended September 30, 2019, was primarily attributable to lower net R&D
expense, which includes a customer ED&D recovery of approximately $15 million.
The decrease in SG&A also reflects lower compensation-related expense due, in
part, to our restructuring initiatives and the impact of our emphasis on cost
management, including the additional measures that we implemented in response to
the impact of COVID-19.

Amortization of Intangible Assets Amortization expense related to intangible
assets was $21.6 million for the three months ended September 30, 2020 and $23.7
million for the three months ended September 30, 2019. The reduction in
amortization expense related to intangible assets reflects the Casting Sale and
the disposal of the intangible assets associated with this business.

Impairment Charge In conjunction with the Casting Sale, the assets and
liabilities associated with this business met the criteria to be classified as
held-for-sale in our Condensed Consolidated Balance Sheet as of September 30,
2019. Upon reclassification to held-for-sale in the third quarter of 2019, we
recorded a pre-tax impairment charge of $225.0 million to reduce the carrying
value of this business to fair value less cost to sell.

Restructuring and Acquisition-Related Costs Restructuring and acquisition-related costs were $9.7 million in the third quarter of 2020 and $11.7 million in the third quarter of 2019. See Note 2 - Restructuring and Acquisition-Related Costs for additional detail.



Operating Income (Loss)  Operating income was $152.0 million in the third
quarter of 2020, as compared to operating loss of $104.4 million in the third
quarter of 2019. Operating margin was 10.7% in the third quarter of 2020, as
compared to (6.2)% in the third quarter of 2019. The changes in operating income
(loss) and operating margin were primarily due to factors discussed in Net
Sales, Cost of Goods Sold, SG&A and Impairment Charge above.

Interest Expense and Interest Income  Interest expense was $53.9 million in the
third quarter of 2020, as compared to $54.3 million in the third quarter of
2019. Interest income was $3.4 million in the third quarter of 2020, as compared
to $2.2 million in the third quarter of 2019. The weighted-average interest rate
of our long-term debt outstanding was 5.6% in the third quarter of 2020 and 5.8%
in the third quarter of 2019.
                                       34
--------------------------------------------------------------------------------

Debt Refinancing and Redemption Costs In the third quarter of 2020, we
voluntarily redeemed the remaining portion of our 6.625% Notes due 2022, which
resulted in a principal payment of $350 million and the payment of $5.7 million
in accrued interest. We expensed approximately $1.3 million for the write-off of
the unamortized debt issuance costs that we had been amortizing over the
expected life of the borrowing, and approximately $3.9 million for the payment
of an early redemption premium.

In the third quarter of 2019, Holdings, AAM, Inc., and certain subsidiaries of
Holdings entered into the First Amendment to the Credit Agreement. As a result,
we expensed $5.1 million for the write-off of the unamortized debt issuance
costs related to the existing Term Loan A Facility and a portion of the
unamortized debt issuance costs related to our Term Loan B Facility that we had
been amortizing over the expected life of the borrowings.

Other Expense, Net Other expense, net includes the net effect of foreign
exchange gains and losses, our proportionate share of earnings from equity in
unconsolidated subsidiaries, and all components of net periodic pension and
postretirement benefit costs other than service cost. Other expense, net was
$1.6 million in the third quarter of 2020, as compared to $2.9 million in the
third quarter of 2019.

Income Tax Benefit Income tax was a benefit of $22.5 million for the three
months ended September 30, 2020, as compared to a benefit of $40.4 million for
the three months ended September 30, 2019. Our effective income tax rate was
(23.8)% in the third quarter of 2020, as compared to 24.6% in the third quarter
of 2019.

We review the likelihood that we will realize the benefit of deferred tax assets
and estimate whether recoverability of our deferred tax assets is "more likely
than not" based on the available evidence. During the previous three month
period ended June 30, 2020, we determined that a portion of our deferred tax
assets related to U.S. interest expense carryforwards were not more likely than
not to be realized and, as such, we recorded a valuation allowance resulting in
tax expense of approximately $36.0 million during the second quarter of 2020.

As enacted under the Tax Cuts and Jobs Act (TCJA), on December 22, 2017, and as
amended by the Coronavirus Aid, Relief, and Economic Security Act (the CARES
Act), section 163(j) of the Internal Revenue Code generally limits the
deductibility of net business interest expense to 30% (or for certain years as
provided under the CARES Act, 50%) of "adjusted taxable income" for taxable
years beginning after December 31, 2017. On July 28, 2020, the Internal Revenue
Service and the U.S. Department of Treasury issued final regulations (the Final
Regulations) and concurrently issued new proposed regulations (the New Proposed
Regulations) under section 163(j) that provide a number of important additional
changes and clarifications to the Final Regulations. Based upon the Final
Regulations and New Proposed Regulations, which were issued during the three
months ended September 30, 2020, as well as the amendments to section 163(j)
made by the CARES Act, we have determined that our deferred tax assets related
to U.S. interest expense carryforwards are more likely than not to be realized
and, as such, we have released the valuation allowance recorded during the
second quarter of 2020 resulting in approximately $36.0 million in tax benefit
during the three month period ended September 30, 2020.

Due to the uncertainty associated with the extent and ultimate impact of
COVID-19 on global automotive production volumes, we may experience lower than
projected earnings in certain jurisdictions in future periods, and it is
reasonably possible that changes in valuation allowances could be recognized in
the next twelve months as a result.

Our effective income tax rate for the three months ended September 30, 2020
varies from our effective income tax rate for the three months ended September
30, 2019 as a result of the items described above. For the three months ended
September 30, 2020 and 2019, our effective income tax rates vary from the U.S.
federal statutory rate of 21% primarily due to favorable foreign tax rates, as
well as the impact of tax credits and the effect of the items described above.

Net Income (Loss) Attributable to AAM and Earnings (Loss) Per Share (EPS) Net
income (loss) attributable to AAM was income of $117.2 million in the third
quarter of 2020, as compared to a loss of $124.2 million in the third quarter of
2019. Diluted earnings per share was $0.99 in the third quarter of 2020, as
compared to diluted loss per share of $1.10 in the third quarter of 2019. Net
income (loss) attributable to AAM and EPS for the third quarters of 2020 and
2019 were primarily impacted by the factors discussed above.

                                       35
--------------------------------------------------------------------------------

RESULTS OF OPERATIONS -- NINE MONTHS ENDED SEPTEMBER 30, 2020 AS COMPARED TO NINE MONTHS ENDED SEPTEMBER 30, 2019

Net Sales Net sales were $3,272.9 million in the first nine months of 2020 as
compared to $5,100.9 million in the first nine months of 2019.  Our change in
sales in the first nine months of 2020, as compared to the first nine months of
2019, primarily reflects an estimated reduction of approximately $1,203 million
associated with the decline in global automotive production as a result of
COVID-19, and a reduction of $509 million as a result of the Casting Sale. Net
sales for the first nine months of 2020, as compared to the first nine months of
2019, also decreased by approximately $88 million associated with the effect of
metal market pass-throughs to our customers and the impact of foreign exchange
related to translation adjustments.

Cost of Goods Sold Cost of goods sold was $2,926.7 million in the first nine
months of 2020 as compared to $4,381.7 million in the first nine months of 2019.
The change in cost of goods sold principally reflects an estimated reduction of
approximately $841 million associated with the decline in global automotive
production as a result of COVID-19, and a reduction of $492 million as a result
of the Casting Sale. Cost of goods sold was also impacted by a decrease of
approximately $88 million related to metal market pass-through costs and the
impact of foreign exchange, as well as the impact of improved operating
performance and lower launch costs and our emphasis on cost management,
including the additional measures that we implemented in response to the impact
of COVID-19.

For the nine months ended September 30, 2020, material costs were approximately
54% of total costs of goods sold as compared to approximately 56% for the nine
months ended September 30, 2019. Material costs as a percentage of cost of goods
sold declined as a result of lower product shipments caused by COVID-19, which
drove lower material costs and caused fixed costs to be a greater component of
cost of goods sold.

Gross Profit  Gross profit was $346.2 million in the first nine months of 2020
as compared to $719.2 million in the first nine months of 2019. Gross margin was
10.6% in the first nine months of 2020 as compared to 14.1% in the first nine
months of 2019. Gross profit and gross margin were impacted by the factors
discussed in Net Sales and Cost of Goods Sold above. While we were able to
significantly reduce our variable costs during the nine months ended September
30, 2020, the sharp decline in sales that began during the first quarter and
extended into the second quarter, as well as the magnitude of the decline in
sales, resulted in a reduction of both gross profit and gross margin.

SG&A SG&A (including R&D) was $230.6 million or 7.0% of net sales in the first
nine months of 2020 as compared to $274.7 million or 5.4% of net sales in the
first nine months of 2019. R&D expense, net of ED&D recoveries, was
approximately $86.3 million in the first nine months of 2020 as compared to
$104.9 million in the first nine months of 2019. The decrease in SG&A in the
first nine months of 2020, as compared to the first nine months of 2019, was
primarily attributable to lower net R&D expense, which includes a customer ED&D
recovery of approximately $15 million. The decrease in SG&A also reflects lower
compensation-related expense due, in part, to our restructuring initiatives and
the impact of our emphasis on cost management, including the additional measures
that we implemented in response to the impact of COVID-19.

The increase in SG&A as a percentage of sales during the nine months ended September 30, 2020, as compared to the nine months ended September 30, 2019, was primarily attributable to the decline in sales as a result of COVID-19.

Amortization of Intangible Assets Amortization expense related to intangible assets for the nine months ended September 30, 2020 was $65.0 million as compared to $73.6 million for the nine months ended September 30, 2019. The reduction in amortization expense related to intangible assets reflects the Casting Sale and the disposal of the intangible assets associated with this business.



Impairment Charges In the first nine months of 2020, the reduction in global
automotive production volumes caused by the impact of COVID-19 represented an
indicator to test our goodwill for impairment. As a result of this goodwill
impairment test, we determined that the carrying values of our Driveline and
Metal Forming reporting units were greater than their respective fair values. As
such, we recorded a total goodwill impairment charge of $510.0 million in the
first nine months of 2020. See Note 3 - Goodwill and Other Intangible Assets for
further detail.

In conjunction with the Casting Sale, the assets and liabilities associated with
this business met the criteria to be classified as held-for-sale in our
Condensed Consolidated Balance Sheet as of September 30, 2019. Upon
reclassification to held-for-sale in the third quarter of 2019, we recorded a
pre-tax impairment charge of $225.0 million to reduce the carrying value of this
business to fair value less cost to sell.


                                       36
--------------------------------------------------------------------------------

Restructuring and Acquisition-Related Costs Restructuring and
acquisition-related costs were $38.6 million for the nine months ended September
30, 2020, as compared to $36.0 million for the nine months ended September 30,
2019. We expect to incur approximately $70 million to $80 million of total
restructuring charges in 2020 and we expect to incur integration charges of $10
million to $15 million in 2020 as we finalize the integration of ERP systems at
legacy MPG locations. See Note 2 - Restructuring and Acquisition-Related Costs
for additional detail regarding our restructuring and integration activity.

Loss on Sale of Business In the first nine months of 2020, we finalized certain
customary post-closing calculations associated with the Casting Sale, resulting
in an additional loss on sale of $1.0 million.

Operating Income (Loss)  Operating income (loss) was a loss of $499.0 million in
the first nine months of 2020 as compared to income of $109.9 million in the
first nine months of 2019. Operating margin was (15.2)% in the first nine months
of 2020 as compared to 2.2% in the first nine months of 2019. The changes in
operating income (loss) and operating margin were due primarily to the factors
discussed in Net Sales, Cost of Goods Sold, Gross Profit, SG&A, and Impairment
Charges above.

Interest Expense and Interest Income  Interest expense was $160.0 million in the
first nine months of 2020 as compared to $163.9 million in the first nine months
of 2019. Interest income was $9.2 million in the first nine months of 2020 as
compared to $3.4 million in the first nine months of 2019. The weighted-average
interest rate of our long-term debt outstanding was 5.6% for the nine months
ended September 30, 2020 and 5.9% for the nine months ended September 30, 2019.
We expect our interest expense for the full year 2020 to be approximately $205
million to $215 million.

Debt Refinancing and Redemption Costs In the first quarter of 2020, we
voluntarily redeemed $100 million of our 6.625% Notes due 2022. As a result, we
expensed approximately $0.4 million for the write-off of the unamortized debt
issuance costs that we had been amortizing over the expected life of the
borrowing, and approximately $1.1 million for the payment of an early redemption
premium.

In the third quarter of 2020, we voluntarily redeemed the remaining portion of
our 6.625% Notes due 2022, which resulted in a principal payment of $350 million
and the payment of $5.7 million in accrued interest. We expensed approximately
$1.3 million for the write-off of the unamortized debt issuance costs that we
had been amortizing over the expected life of the borrowing, and approximately
$3.9 million for the payment of an early redemption premium.

In the first nine months of 2019, Holdings, AAM, Inc., and certain subsidiaries
of Holdings entered into the First Amendment to the Credit Agreement. As a
result, we expensed $5.1 million for the write-off of the unamortized debt
issuance costs related to the existing Term Loan A Facility and a portion of the
unamortized debt issuance costs related to our Term Loan B Facility that we had
been amortizing over the expected life of the borrowings.

Also in the first nine months of 2019, we voluntarily redeemed the remaining
balance outstanding under our 7.75% Notes due 2019. This resulted in a principal
payment of $100 million and $0.3 million in accrued interest. We expensed
approximately $0.1 million for the write-off of the unamortized debt issuance
costs that we had been amortizing over the expected life of the borrowing, and
approximately $2.2 million for an early redemption premium.

Other Expense, Net Other expense, net includes the net effect of foreign
exchange gains and losses, our proportionate share of earnings from equity in
unconsolidated subsidiaries, and all components of net periodic pension and
postretirement benefit costs other than service cost. Other expense, net was
$3.8 million in the first nine months of 2020 as compared to $9.0 million in the
first nine months of 2019.

Income Tax Benefit Income tax was a benefit of $63.1 million for the nine months
ended September 30, 2020 as compared to a benefit of $37.4 million for the nine
months ended September 30, 2019. Our effective income tax rate was 9.6% in the
first nine months of 2020 as compared to 55.7% in the first nine months of 2019.

During the nine months ended September 30, 2020, we recognized the impact of the
items discussed under Income Tax Benefit in the "Results of Operations - Three
Months Ended September 30, 2020 as Compared to Three Months Ended September 30,
2019" section of this MD&A. Additionally, we recognized a tax benefit in the
second quarter of 2020 of approximately $7.0 million related to our ability to
carry back projected current year losses under the CARES Act to years with the
previous 35% tax rate. Further, during the nine months ended September 30, 2020,
we recognized a net tax benefit of approximately $7.5 million related to our
ability to carry back losses from prior years under the CARES Act and finalized
an advance pricing agreement in a foreign jurisdiction, which resulted in a tax
benefit of approximately $6.8 million.

                                       37
--------------------------------------------------------------------------------

Our effective income tax rate for the nine months ended September 30, 2020
varies from our effective income tax rate for the nine months ended
September 30, 2019, as a result of the items described above, and also as a
result of the impact of the goodwill impairment charge recorded during the first
nine months of 2020, which had no corresponding income tax benefit. In addition,
in the first nine months of 2019, we recognized an income tax benefit of $9.3
million related to final regulations issued by the Department of Treasury and
Internal Revenue Service in the first quarter of 2019. The final regulations
changed the manner in which we were required to compute the one-time transition
tax under the Tax Cuts and Jobs Act that was imposed on certain foreign earnings
for which U.S. income tax was previously deferred.

For the nine months ended September 30, 2020 and 2019, our effective income tax
rates vary from the U.S. federal statutory rate of 21% primarily due to
favorable foreign tax rates, as well as the impact of tax credits and the effect
of the items described above.

Net Income (Loss) Attributable to AAM and Earnings (Loss) Per Share (EPS) Net
income (loss) attributable to AAM was a loss of $597.3 million in the first nine
months of 2020 as compared to a loss of $30.1 million in the first nine months
of 2019. Diluted EPS was a loss of $5.28 per share in the first nine months of
2020 as compared to a loss of $0.27 per share in the first nine months of 2019.
Net income (loss) attributable to AAM and EPS for the first nine months of 2020
and 2019 were primarily impacted by the factors discussed above.

SEGMENT REPORTING



Our business is organized into Driveline and Metal Forming segments, with each
representing a reportable segment under ASC 280 Segment Reporting. In the fourth
quarter of 2019, we completed the Casting Sale. The Casting Sale did not include
the entities that conduct AAM's casting operations in El Carmen, Mexico, which
are now included in our Driveline segment. The Casting Sale did not qualify for
classification as discontinued operations, as it did not represent a strategic
shift in our business that has had, or will have, a major effect on our
operations and financial results. As such, we continue to present Casting as a
segment in the tables below for the periods prior to the sale, and the reported
amounts are now comprised entirely of the U.S. casting operations that were
included in the sale. The amounts previously reported in our Casting segment for
the retained operations in El Carmen, Mexico have been reclassified to our
Driveline segment for the periods presented.

The results of each segment are regularly reviewed by the chief operating decision maker to assess the performance of the segment and make decisions regarding the allocation of resources to the segments.

Our product offerings by segment are as follows:



•Driveline products consist primarily of front and rear axles, driveshafts,
differential assemblies, clutch modules, balance shaft systems, disconnecting
driveline technology, and electric and hybrid driveline products and systems for
light trucks, SUVs, crossover vehicles, passenger cars and commercial vehicles;
and
•Metal Forming products consist primarily of axle and transmission shafts, ring
and pinion gears, differential gears and assemblies, connecting rods and
variable valve timing products for Original Equipment Manufacturers and Tier 1
automotive suppliers.

The following table represents sales by reportable segment for the three and nine months ended September 30, 2020 and 2019 (in millions):


                                         Three Months Ended September 30,                Nine Months Ended September 30,
                                             2020                    2019                   2020                    2019
Driveline                            $         1,094.5          $   1,186.8          $        2,529.9          $   3,534.6
Metal Forming                                    433.2                476.6                   1,005.8              1,444.1
Casting                                              -                168.4                         -                541.6
Eliminations                                    (113.6)              (154.4)                   (262.8)              (419.4)
Net Sales                            $         1,414.1          $   1,677.4          $        3,272.9          $   5,100.9



The change in Driveline sales for the three and nine months ended September 30,
2020, as compared to the three and nine months ended September 30, 2019,
primarily reflects estimated reductions of approximately $73 million and $992
million, respectively, associated with the impact of the decline in global
automotive production as a result of COVID-19. These estimated reductions
include approximately $73 million and $934 million, respectively, related to
external customers. The
                                       38
--------------------------------------------------------------------------------

change in Driveline sales also reflects a reduction of approximately $11 million
and $47 million, respectively, associated with the effect of metal market
pass-throughs to our customers and the impact of foreign exchange related to
translation adjustments.

The change in net sales in our Metal Forming segment in the three and nine
months ended September 30, 2020, as compared to the three and nine months ended
September 30, 2019, primarily reflects estimated reductions of approximately $15
million and $380 million, respectively, associated with the impact of the
decline in global automotive production as a result of COVID-19. These estimated
reductions include approximately $14 million and $269 million, respectively,
related to external customers. Also for the three and nine months ended
September 30, 2020, as compared to the three and nine months ended September 30,
2019, Metal Forming sales were impacted by a reduction of approximately $4
million and $41 million, respectively, associated with the effect of metal
market pass-throughs to our customers and the impact of foreign exchange related
to translation adjustments.

The change in net sales in our Casting segment in the three and nine months ended September 30, 2020, as compared to the three and nine months ended September 30, 2019, is the result of the Casting Sale that was completed in the fourth quarter of 2019 as AAM no longer operates in this business.



We use Segment Adjusted EBITDA as the measure of earnings to assess the
performance of each segment and determine the resources to be allocated to the
segments. We define EBITDA to be earnings before interest expense, income taxes,
depreciation and amortization. Segment Adjusted EBITDA is defined as EBITDA for
our reportable segments excluding the impact of restructuring and
acquisition-related costs, debt refinancing and redemption costs, gain (loss) on
the sale of a business, impairment charges, pension settlements, and
non-recurring items.

The amounts for Segment Adjusted EBITDA for the three and nine months ended September 30, 2020 and 2019 are as follows (in millions):


                                          Three Months Ended September 30,                 Nine Months Ended September 30,
                                              2020                    2019                    2020                    2019
Driveline                             $           207.4          $     181.0          $           315.5          $     485.9
Metal Forming                                      89.7                 79.3                      142.8                250.2
Casting                                               -                  5.5                          -                 40.7
Total segment adjusted EBITDA         $           297.1          $     265.8          $           458.3          $     776.8



For the three months ended September 30, 2020, as compared to the three months
ended September 30, 2019, the increase in Segment Adjusted EBITDA for the
Driveline segment was primarily attributable to improved operating performance
and lower launch costs, as well as the impact of a customer ED&D recovery of
approximately $15 million during the third quarter of 2020. The increase in
Driveline Segment Adjusted EBITDA also reflects our continued emphasis on cost
management, and the additional measures that we implemented in response to
COVID-19. These favorable factors were partially offset by lower net global
automotive production volumes as a result of COVID-19.

For the nine months ended September 30, 2020, as compared to the nine months
ended September 30, 2019, the change in Segment Adjusted EBITDA for the
Driveline segment was primarily attributable to lower net global automotive
production volumes as a result of the impact of COVID-19. This was partially
offset by improved operating performance and lower launch costs, as well as the
impact of a customer ED&D recovery of approximately $15 million. The change in
Driveline Segment Adjusted EBITDA also reflects the impact of our continued
emphasis on cost management, and the additional measures that we implemented in
response to the impact of COVID-19.

The increase in Metal Forming Segment Adjusted EBITDA for the three months ended
September 30, 2020, as compared to the three months ended September 30, 2019,
was primarily attributable to improved operating performance, as well as the
impact of our continued emphasis on cost management, and the additional measures
that we implemented in response to COVID-19. These favorable factors were
partially offset by lower net global automotive production volumes as a result
of COVID-19.

The change in Metal Forming Segment Adjusted EBITDA for the nine months ended
September 30, 2020, as compared to the nine months ended September 30, 2019, was
primarily attributable to the impact of the decline in global automotive
production as a result of the impact of COVID-19. This was partially offset by
improved operating performance, as well as the impact of our continued emphasis
on cost management, and the additional measures that we implemented in response
to the impact of COVID-19.

                                       39
--------------------------------------------------------------------------------

The change in Segment Adjusted EBITDA for our Casting segment in the three and
nine months ended September 30, 2020, as compared to the three and nine months
ended September 30, 2019, was the result of the Casting Sale that was completed
in the fourth quarter of 2019 as AAM no longer operates in this business.

Reconciliation of Non-GAAP and GAAP Information



In addition to results reported in accordance with accounting principles
generally accepted in the United States of America (GAAP) in this MD&A, we have
provided certain non-GAAP financial measures such as EBITDA and Total Segment
Adjusted EBITDA. Such information is reconciled to its closest GAAP measure in
accordance with Securities and Exchange Commission rules below.

We define EBITDA to be earnings before interest expense, income taxes,
depreciation and amortization. Total Segment Adjusted EBITDA is defined as
EBITDA for our reportable segments excluding the impact of restructuring and
acquisition-related costs, debt refinancing and redemption costs, gain (loss) on
the sale of a business, impairment charges, pension settlements, and
non-recurring items. We believe that EBITDA and Total Segment Adjusted EBITDA
are meaningful measures of performance as they are commonly utilized by
management and investors to analyze operating performance and entity valuation.
Our management, the investment community and the banking institutions routinely
use EBITDA and Total Segment Adjusted EBITDA, together with other measures, to
measure our operating performance relative to other Tier 1 automotive suppliers
and to assess the relative mix of Adjusted EBITDA by segment. We also believe
that Total Segment Adjusted EBITDA is a meaningful measure as it is used for
operational planning and decision-making purposes. These non-GAAP financial
measures are not and should not be considered a substitute for any GAAP measure.
Additionally, non-GAAP financial measures as presented by AAM may not be
comparable to similarly titled measures reported by other companies.

                                            Three Months Ended September 30,                Nine Months Ended September 30,
                                               2020                    2019                    2020                     2019
Net income (loss)                       $          117.2          $    (124.1)         $           (597.2)         $     (29.7)
Interest expense                                    53.9                 54.3                       160.0                163.9
Income tax benefit                                 (22.5)               (40.4)                      (63.1)               (37.4)
Depreciation and amortization                      125.0                134.2                       393.7                411.5
EBITDA                                  $          273.6          $      24.0          $           (106.6)         $     508.3
Restructuring and acquisition-related
costs                                                9.7                 11.7                        38.6                 36.0
Debt refinancing and redemption costs                5.2                  5.1                         6.7                  7.5
Impairment charges                                     -                225.0                       510.0                225.0
Loss on sale of business                               -                    -                         1.0                    -
Non-recurring items:
Malvern Fire charges, net of recoveries              8.6                    -                         8.6                    -
Total segment adjusted EBITDA           $          297.1          $     265.8          $            458.3          $     776.8




                                       40

--------------------------------------------------------------------------------

LIQUIDITY AND CAPITAL RESOURCES



Our primary liquidity needs are to fund debt service obligations, capital
expenditures and working capital requirements, in addition to advancing our
strategic initiatives. We believe that operating cash flow, available cash and
cash equivalent balances and available borrowing capacity under our Senior
Secured Credit Facilities and foreign credit facilities will be sufficient to
meet these needs.

COVID-19 Considerations Related to Liquidity and Capital Resources

In order to mitigate the financial impact of COVID-19, we have implemented measures to conserve cash and protect our liquidity position, including:



•Continuing to flex our variable cost structure;
•Continuing to manage our controllable expenses, net of costs to ensure the
health and safety of our associates;
•Reducing the annual cash retainer for each non-employee director by 40% through
September 30, 2020;
•Reducing salaries for executive officers by 30% and for certain other
associates by various percentages depending on level through September 30, 2020;
•Reducing our projected capital expenditures for the year;
•Amending our Credit Agreement to, among other things, revise our financial
maintenance covenants to provide additional financial flexibility; and
•Pursuing options to defer and reduce tax payments through the CARES Act and
similar global initiatives.

At September 30, 2020, we had nearly $1.5 billion of liquidity consisting of
approximately $537 million of cash and cash equivalents, approximately $891
million of available borrowings under our Revolving Credit Facility and
approximately $55 million of available borrowings under foreign credit
facilities. We have no significant debt maturities before 2024. Based on our
cash and cash equivalents, together with available borrowings under credit
facilities, and the measures we are taking to conserve cash, we believe that our
current liquidity position and projected operating cash flows will be sufficient
to meet our primary cash needs for the next 12 months.

Operating Activities In the first nine months of 2020, net cash provided by
operating activities was $246.4 million as compared to $378.6 million in the
first nine months of 2019. The following factors impacted cash from operating
activities in the first nine months of 2020, as compared to the first nine
months of 2019:

Impact of COVID-19 We experienced lower earnings and cash flows from operating
activities as a result of the significant reduction in production volumes during
the nine months ended September 30, 2020 due to the impact of COVID-19.

Income taxes Income taxes paid (refunds received), net was a refund of $5.2
million in the first nine months of 2020 as compared to taxes paid of $45.7
million in the first nine months of 2019. During the third quarter of 2020, we
received an income tax refund of approximately $31 million related to the
utilization of net operating losses under the provisions of the CARES Act. See
Note 1 - Organization and Basis of Presentation for additional detail regarding
the CARES Act.

Also in the first nine months of 2020, we finalized an advance pricing agreement
in a foreign jurisdiction, which resulted in a cash payment to the tax
authorities of $18.5 million, and a reduction of our liability for unrecognized
tax benefits and related interest and penalties of $25.3 million. As of
September 30, 2020 and December 31, 2019, we have recorded a liability for
unrecognized income tax benefits and related interest and penalties of $23.3
million and $52.6 million, respectively.

Restructuring and acquisition-related costs For the full year 2020, we expect
restructuring and acquisition-related payments in cash flows from operating
activities to be between $55 million and $70 million, and we expect the timing
of cash payments to approximate the timing of charges incurred.

Pension and other postretirement benefits Due to the availability of our
pre-funded pension balances (previous contributions in excess of prior required
pension contributions) related to certain of our U.S. pension plans, we expect
our regulatory pension funding requirements in 2020 to be approximately $1.5
million. We expect our cash payments for other postretirement benefit
obligations in 2020, net of GM cost sharing, to be approximately $17 million.


                                       41
--------------------------------------------------------------------------------

Investing Activities In the first nine months of 2020, net cash used in
investing activities was $149.2 million as compared to $335.5 million for the
nine months ended September 30, 2019. Capital expenditures were $146.3 million
in the first nine months of 2020 as compared to $335.3 million in the first nine
months of 2019. We expect our capital spending in 2020 to be up to $250 million.

Financing Activities In the first nine months of 2020, net cash used in
financing activities was $87.6 million, as compared to $140.1 million in the
first nine months of 2019. The following factors impacted cash from financing
activities in the first nine months of 2020 as compared to the first nine months
of 2019:

Senior Secured Credit Facilities In 2019, Holdings, AAM, Inc., and certain
subsidiaries of Holdings entered into the First Amendment (First Amendment) to
the Credit Agreement. The First Amendment, among other things, established $340
million in incremental term loan A commitments with a maturity date of July 29,
2024 (Term Loan A Facility due 2024), reduced the availability under the
Revolving Credit Facility from $932 million to $925 million and extended the
maturity date of the Revolving Credit Facility from April 6, 2022 to July 29,
2024, and modified the applicable margin with respect to interest rates under
the Term Loan A Facility due 2024 and interest rates and commitment fees under
the Revolving Credit Facility. The applicable margin and the maturity date for
the Term Loan B Facility remained unchanged. The proceeds of $340 million were
used to repay all of the outstanding loans under the existing Term Loan A
Facility and a portion of the outstanding Term Loan B Facility, resulting in no
additional indebtedness. This also satisfies all payment requirements under the
Term Loan B Facility until maturity in 2024.

In April 2020, Holdings, AAM, Inc., and certain subsidiaries of Holdings entered
into the Second Amendment (Second Amendment) to the Credit Agreement. For the
period from April 1, 2020 through March 31, 2022 (the Amendment Period), the
Second Amendment, among other things, replaced the total net leverage ratio
covenant with a new senior secured net leverage ratio covenant, reduced the
minimum levels of the cash interest expense coverage ratio covenant, and
modified certain covenants restricting the ability of Holdings, AAM and certain
subsidiaries of Holdings to create, incur, assume or permit to exist certain
additional indebtedness and liens and to make certain restricted payments,
voluntary payments and distributions. The Second Amendment also increased the
maximum levels of the total net leverage ratio covenant after the Amendment
Period, modified the applicable margin with respect to interest rates under the
Term Loan A Facility due 2024 and interest rates and commitment fees under the
Revolving Credit Facility, and increased the minimum adjusted London Interbank
Offered Rate for Eurodollar-based loans under the Term Loan A Facility due 2024
and Revolving Credit Facility. The applicable margin for the Term Loan B
Facility remains unchanged. We paid debt issuance costs of $4.6 million in the
nine months ended September 30, 2020 related to the Second Amendment.

The Senior Secured Credit Facilities provide back-up liquidity for our foreign
credit facilities. We intend to use the availability of long-term financing
under the Senior Secured Credit Facilities to refinance any current maturities
related to such debt agreements that are not otherwise refinanced on a long-term
basis in their local markets, except where otherwise reclassified to Current
portion of long-term debt on our Condensed Consolidated Balance Sheet.

At September 30, 2020, we had $891.4 million available under the Revolving
Credit Facility. This availability reflects a reduction of $33.6 million for
standby letters of credit issued against the facility. The borrowings under the
Revolving Credit Facility are used for general corporate purposes.

6.875% Notes due 2028 In June 2020, we issued $400 million in aggregate
principal amount of 6.875% senior notes due 2028 (the 6.875% Notes). Proceeds
from the 6.875% Notes were used primarily to fund the redemption of the
remaining $350 million of 6.625% senior notes due 2022 described below and for
general corporate purposes. We paid debt issuance costs of $6.4 million in the
nine months ended September 30, 2020 related to the 6.875% Notes.

Redemption of 6.625% Notes due 2022 In the first quarter of 2020, we voluntarily
redeemed a portion of our 6.625% Notes due 2022. This resulted in a principal
payment of $100.0 million and $2.0 million in accrued interest. We expensed
approximately $0.4 million for the write-off of the unamortized debt issuance
costs that we had been amortizing over the expected life of the borrowing, and
approximately $1.1 million for the payment of an early redemption premium.

In the third quarter of 2020, we voluntarily redeemed the remaining portion of
our 6.625% Notes due 2022, which resulted in a principal payment of $350 million
and the payment of $5.7 million in accrued interest. We expensed approximately
$1.3 million for the write-off of the unamortized debt issuance costs that we
had been amortizing over the expected life of the borrowing, and approximately
$3.9 million for the payment of an early redemption premium.


                                       42
--------------------------------------------------------------------------------

Redemption of 7.75% Notes due 2019 In May 2019, we voluntarily redeemed the
remaining balance outstanding under our 7.75% Notes due 2019. This resulted in a
principal payment of $100 million and $0.3 million in accrued interest. We
expensed approximately $0.1 million for the write-off of the unamortized debt
issuance costs that we had been amortizing over the expected life of the
borrowing, and approximately $2.2 million for an early redemption premium.

Foreign credit facilities We utilize local currency credit facilities to finance
the operations of certain foreign subsidiaries. At September 30, 2020, $104.5
million was outstanding under our foreign credit facilities, as compared to
$106.0 million at December 31, 2019. At September 30, 2020, an additional $54.7
million was available under our foreign credit facilities.

Treasury stock Treasury stock increased by $2.7 million in the first nine months
of 2020 to $212.0 million as compared to $209.3 million at year-end 2019, due to
the withholding and repurchase of shares of AAM stock to satisfy employee tax
withholding obligations due upon the vesting of performance shares and
restricted stock units.

Subsidiary Guarantees of Registered Debt Securities Our 6.875% Notes, 6.50%
Notes, 6.25% Notes (due 2026), and 6.25% Notes (due 2025) (collectively, the
Notes) are senior unsecured obligations of AAM, Inc. (Issuer); all of which are
fully and unconditionally guaranteed, on a joint and several basis, by Holdings
and substantially all domestic subsidiaries of AAM, Inc. and MPG Inc (Subsidiary
Guarantors). Holdings has no significant assets other than its 100% ownership in
AAM, Inc. and MPG Inc., and no direct subsidiaries other than AAM, Inc. and MPG
Inc.

Each guarantee by Holdings and/or any of the Subsidiary Guarantors is:



•a senior obligation of the relevant Subsidiary Guarantors;
•the unsecured and unsubordinated obligation of the relevant Subsidiary
Guarantors; and
•of equal rank with all other existing and future unsubordinated and unsecured
indebtedness of the relevant Subsidiary Guarantors.

Each guarantee by a Subsidiary Guarantor provides by its terms that it will be automatically, fully and unconditionally released and discharged upon:



•Any sale, exchange or transfer (by merger or otherwise) of the Capital Stock of
such Subsidiary Guarantor, or the sale or disposition of all the assets of such
Subsidiary Guarantor, which sale, exchange, transfer or disposition is made in
compliance with the applicable provisions of the indentures;
•the exercise by the Issuer of its legal defeasance option or covenant
defeasance option or the discharge of the Issuer's obligations under the
indentures in accordance with the terms of the indentures;
•the election of the Issuer to affect such a release following the date that
such guaranteed Notes have an investment grade rating from both Standard &
Poor's Ratings Group, Inc, and Moody's Investors Service, Inc.


                                       43
--------------------------------------------------------------------------------

The following represents summarized financial information of AAM Holdings, AAM
Inc. and the Subsidiary Guarantors (collectively, the Combined Entities). The
information has been prepared on a combined basis and excludes any investments
of AAM Holdings, AAM Inc., or the Subsidiary Guarantors in non-guarantor
subsidiaries. Intercompany transactions and amounts between Combined Entities
have been eliminated.

Statement of Operations Information                                      (in millions)
                                                         Nine Months Ended          Year Ended December
                                                        September 30, 2020               31, 2019
Net sales                                              $          2,538.9          $          3,043.3
Gross profit                                                        157.6                       192.0
Loss from operations                                               (486.3)                     (793.3)
Net loss                                                           (528.8)                     (718.0)

Balance Sheet Information                                                (in millions)
                                                        September 30, 2020           December 31, 2019
Current assets                                         $          1,177.9          $            699.5
Noncurrent assets                                                 2,780.1                     3,120.4

Current liabilities                                               1,099.4                       551.9
Noncurrent liabilities                                            4,253.5                     4,281.3

Redeemable preferred stock                                              -                           -
Noncontrolling interest                                                 -                           -

At September 30, 2020 and December 31, 2019, amounts owed by the Combined Entities to non-guarantor entities totaled approximately $640 million and $125 million, respectively, and amounts owed to the Combined Entities from non-guarantor entities totaled approximately $710 million and $630 million, respectively.





                                       44
--------------------------------------------------------------------------------

CRITICAL ACCOUNTING ESTIMATES



Subsequent to the goodwill impairment charge that was recorded for our Driveline
reporting unit in the first quarter of 2020, the fair value of this reporting
unit approximated its carrying value. Fair value of the reporting unit is
estimated based on a combination of discounted cash flows and the use of pricing
multiples derived from an analysis of comparable public companies multiplied
against historical and/or anticipated financial metrics of the reporting unit.
These calculations contain uncertainties as they require management to make
assumptions including, but not limited to, market comparables, future cash flows
of the reporting unit, and appropriate discount and long-term growth rates.

A decline in the actual cash flows of the Driveline reporting unit in future
periods, as compared to the projected cash flows used in the valuation, could
result in the carrying value of this reporting unit exceeding its fair value.
Further, a change in market comparables, discount rate or long-term growth rate,
as a result of a change in economic conditions or otherwise, including those
resulting from the impact of COVID-19, could result in the carrying value of
this reporting unit exceeding its fair value, which would result in an
additional impairment charge.

AAM's critical accounting estimates are included in our Annual Report on Form
10-K for the year ended December 31, 2019 and did not materially change during
the nine months ended September 30, 2020.

CYCLICALITY AND SEASONALITY



Our operations are cyclical because they are directly related to worldwide
automotive production, which is itself cyclical and dependent on general
economic conditions and other factors. Typically, our business is also
moderately seasonal as our major OEM customers historically have an extended
shutdown of operations (normally 1-2 weeks) in conjunction with their model year
changeover and an approximate one-week shutdown in December. Our major OEM
customers also occasionally have longer shutdowns of operations (up to six
weeks) for program changeovers. Accordingly, our quarterly results may reflect
these trends.

LITIGATION AND ENVIRONMENTAL MATTERS

We are involved in, or potentially subject to, various legal proceedings or claims incidental to our business. These include, but are not limited to, matters arising out of product warranties, tax or contractual matters, and environmental obligations. Although the outcome of these matters cannot be predicted with certainty, at this time we do not believe that any of these matters, individually or in the aggregate, will have a material adverse effect on our financial condition, results of operations or cash flows.



We are subject to various federal, state, local and foreign environmental and
occupational safety and health laws, regulations and ordinances, including those
regulating air emissions, water discharge, waste management and environmental
cleanup. We will continue to closely monitor our environmental conditions to
ensure that we are in compliance with all laws, regulations and ordinances. We
have made, and anticipate continuing to make, capital and other expenditures
(including recurring administrative costs) to comply with environmental
requirements at our current and former facilities. Such expenditures were not
significant in the third quarter of 2020.

© Edgar Online, source Glimpses